It’s Godzilla meets Mothra.

Ottawa, the first week in May, and every broadcasting and production company with a multimillion dollar revenue base is gathering in the nation’s capital to do battle for a specialty channel licence.

This, the second open call for niche broadcasting services, is likely the last of its kind, and that is bringing together ctv, CanWest, cbc, Baton, wic, chum, Labatt, Alliance, Atlantis, Cinar and Nelvana in a Canadian Clash of the Titans beginning May 6, scheduled to last three weeks, and culminating in some broken hearts and some outstanding victory parties.

On the table are 40 applications for news, sports, children’s, comedy, history, sci-fi, lifestyle, and The Horse Network, with Cancon commitments ranging from 100% to 20%, $156.7 million to $4.1 million.

Instructions from the cable companies to build business plans based on digital distribution were obeyed by some, ignored by others, creating a dog’s breakfast of Cancon levels that has left many going into the hearings concerned about how Canadian commitments will be weighted against the likes of proven consumer demand, backers with deep pockets, marketing plans, and a realistic evaluation of the costs of creating and acquiring Cancon when the cablecos are paying for actual penetration, whatever that may be.

‘Are they going to license the highest Canadian, or are they taking the big picture into account?’ asks one applicant who will be among the throngs paying rapt attention to Fern Belisle’s opening address Monday morning for an indication of the commission’s mind-set.

The big picture per se, is messy. ‘It’s going to be a very tough hearing for applicants because I don’t think there’s ever been a situation where there’s been so many unknowns,’ says Elizabeth Macdonald, president of the cftpa. ‘There’s a tremendous amount of pressure to convince the commission that they’ve got a workable business plan, yet the whole environment is still a big question mark.’

Whither ExpressVu and its alternate distribution system is part of the picture, post the Anik E1 hard failure and the short circuiting of its intended transponder space. But at the center of the morass are the cable companies which submitted their analog capacity updates to the crtc April 1 and moved the industry closer to an idea of how many services could be licensed, but not how they’ll be packaged and distributed.

Capacity

According to the Canadian Cable Television Association, 66% of the cable systems in Canada can accommodate up to three new services, with another 8% able to take between four and nine.

With Rogers and Shaw Communications rebuilding analog capacity and Telesat saying it’s able to beam down eight to 12 new specialties nation-wide, applicants are bucking a third tier is possible and anticipate that six to nine new channels could be licensed.

The question of how many being semi-answered, the question of how much control the cable companies will be left with in deciding what services get the sought-after analog placement remains.

The ccta’s intervention lobbying that all services meeting licensing criteria should be greenlit (one per genre), is receiving support amongst the would-be licensees. Many are willing to play the risk card, although the cablecos’ proposal that all be licensed for digital and the analog chosen few be selected via an agreement between the licensee and distributor is raising hackles.

No guarantee

There’s no guarantee the crtc is willing to license a pile of services and set them free to succeed or fail depending on what agreement they can cobble together with the cablecos, says one applicant. ‘Who exactly is in charge of the broadcasting system, the crtc or the cable companies? It’s an issue that needs to be addressed at this hearing.’

Other issues are no small potatoes either, say production agencies, including the cftpa, the Directors Guild and the Canadian Conference of the Arts, which are intervening on behalf of the independent community.

Among the points to be addressed are some applicants’ programming strategies that divorce expenditure requirements from exhibition requirements, the potential for self-dealing amongst vertically integrated broadcasters, and production strategies that threaten to dilute the independent producer’s decision-making power and ownership of the product.

According to Macdonald, it seems the idea is to create a whole new definition of independent producer, one who acts in a service capacity and is without the rights he or she would traditionally hold.

‘As some of these companies become more vertically integrated, they want to produce and have access to those moneys. We’re making the point that in order to be considered a contribution to the independent community, the marketing opportunities and interests in the production must stay with the independent producer.’

If the big picture is complicated, the up-close cat fights are a little clearer. The stakes are high, and with several equally strong players in the primary categories, the gloves are off. The majority of the 1,475 interventions filed with the commission are letters of support, but amongst them is a batch of interventions from applicants against the competition.

cbc, pitching with Southam for a headline news service, is out, guns blazing in the news category with interventions against chum’s Pulse 24 app, ctv’s N1 Headline News, wic’s regional news services, Report on Business Television and the Financial Network.

Biased research

cbc accuses ctv of filing biased research, planning to practice long-form journalism that will directly compete with CBC Newsworld despite the moniker of Headline News, and applying for N1 to cross-subsidize the existing network

‘If ctv, as an over-the-air broadcaster, is arguing that they need a slice of the subscriber revenue pie to stay afloat then they should just say so and justify it.’

Labeling the accusations ‘without basis in fact,’ ctv readily admits that a news service would and should strengthen the whole ctv plant, filed affidavits from Environics and Canadian Facts, and expresses a willingness to submit to a condition of licence that dictates its headline news format.

‘We believe the crtc must look at the news genre first and foremost amongst other genres. The cbc is a very excellent news service, but in a national news environment, they shouldn’t be the only player,’ says Bob Hurst, head of service for N1.

Also at the receiving end of cbc’s wrath are wic’s applications for regional services in Edmonton, Calgary and Vancouver. Given the crtc is readying to hear applications on new broadcasting services in those markets later this year, ‘we believe that these applications are little more than attempts to bypass the regulatory process to determine whether local licensees should be granted in these areas and finesse the competition in the process. This said, we believe the commission will recognize the transparencies of these applications for what they are.’

Gentle yet strident

CanWest, somewhat more subtle, has filed reminders that any decisions on wic’s regional news applications shouldn’t impact the processes in play for services in those areas, but comes out gentle yet strident on the teletoon application, which it calls a potential ‘de facto cartel controlling the production, distribution and exhibition of Canadian children’s programming.’

The vertical integration concept is exemplified in the teletoon application, which brings together two primary suppliers of Canadian animation, Cinar and Nelvana, with Family Channel, owned 50% by Astral Communications, which also owns Canal Famille in Quebec, and ytv, controlled by Shaw Communications.

CanWest, which gets 71% of its Canadian animation from Nelvana, Cinar and Astral, cautions that with a licence, the group could have four distribution outlets and additional ad revenue which could take away much of CanWest’s advertiser support.

‘It would have the power to maintain the best product for their exclusive use only or allowing a window system only after multiple plays on their own outlets.’

Leaving teletoon alone, ytv is gunning after Vision’s Kids Net application and its targeting of what it calls the ‘under-served’ market of the 12 and under crowd.

Competing with YTV

‘Vision is proposing a service for aged 12 and under who represent a significant portion of ytv’s audience, program content and revenues. As its proposal is currently drafted, Kids Net will be competing against ytv over much of the broadcast day. It has the potential to jeopardize a significant portion of ytv’s revenue. The loss of revenue will result in lower revenues for ytv and in turn, less moneys being put into the independent production community.’

The battle for comedy is crystallizing the debate over the weight of Cancon investments. The Second City Comedy channel, controlled by wic, is waging a licensing yea or nay won’t rotate solely on who’s offering the highest Canadian content level.

Offering the lowest subscriber fees of the three applicants at $0.26 per sub, Second City is also proposing the lowest level of Cancon at 30% in all time periods when subscriber numbers are below three million compared to Baton’s The Comedy Network and Salter Street Films/chum’s All Comedy Network, both running about 60% over an 18-hour day.

The Second City application isn’t at a disadvantage, says Andrew Alexander, president and executive producer of Second City. It’s a well-thought-out proposal based on what it takes to produce sustainable quality programming that will draw an audience.

‘The question is what level of quality Canadian content you can realistically produce. If you’ve got the highest level with a high repeat factor, you’re building a short-term service. There isn’t a private broadcaster loaded with 70% Cancon in primetime that could make a go of it. How could a specialty channel?’

While most of the agencies have only gone so far as to recommend genres of service (the ccta tags history, comedy, mystery and children’s as its categories of choice), the dgc goes in depth on individual applications for each category, not the least surprising of which is its support for wic’s infomercial channel proposal, Opportunity tv, free to cable, earmarking 50% of gross for indie production and offering a development fund for feature film.

History is also among its supported service types, but it takes issue with both the Labatt/a&e and the Alliance/ctv pitches.

A comparison of Cancon expenditure levels is difficult because the Labatt pitch is a straight number and the Alliance app a sliding scale geared to penetration, says the DGC. adding that Labatt’s program supply agreement with a&e is inconsistent with the notion of a separate Canadian rights market and Alliance needs to provide more details on the issue of safeguards for independent production.

One final hot topic of choice is which programs belong to whom. In the battle for regional sports, tsn is all over ctv’s S3 proposal in an intervention claiming S3 is ‘not in a position to deliver ‘on its live-event programming promises since some of its proposed sked is made up of properties to which tsn holds the rights, with ctv blistering back that sports groups in the country welcome another window and filing about 20 letters of support.

cbc too makes the point that many would-be licensees have generated program slates which rely to varying degrees on cbc produc. Program acquisitions from the public broadcaster should be based on the understanding that it expects to recover all rights cost, says the CBC.

‘For example, should the History Channel or TSN Plus be licensed, the Corporation would look forward to entering into discussions for the use of cbc product.’

How the commission will shakeout winners from the hodgepodge of business plans is anyone’s guess, but if it’s all about marketing, the established broadcasters have the edge, says Mark Lewis, director of business affairs/council for chum’s and key pitcher on its applications.

‘You’re going to need to get the viewer’s attention and therefore, this is all about leverage, the ability to cross-promote new services on existing services. We are absolutely going to do that.’

But Phyllis Yaffe, ceo of Showcase and key pitcher on The History and Entertainment Network application, says it’s difficult to say what combination of factors could result in a licence.

‘I think you have to be able to prove you can sustain whatever business plan you’ve put forth. It’s an easier round to get a licence in but a harder round to build a business plan. If you can do that and show that you, the entrepreneur, are willing to take the risk, then you may get the right to live with it.’

In the meantime, the industry can watch some fine live theater on the local community channel. Last round yielded the likes of a big cat strolling through 140 Promenade de Portage on a leash, and with the circus-like atmosphere presiding this time, who knows.

Applicants come armed with testimonials, paper, video, and some in person, everyone from Kurt Vonnegut and John Landis to Harrison McCain and MacFarland’s Rentit, all saying what Bruce Cockburn says so succinctly in support of chum’s Much More Music adult contemporary channel application. In a nutshell, the service is timely and necessary. ‘So approve the damn thing!’